Blog

How to grow profits in difficult markets

It seems we could be entering a further period of market uncertainty. Global Stock markets have fallen their heady peaks recently and Europe is back in the news with concerns over the entire region, from new concerns over Greece and German growth slowing dramatically. On the other sides of the world both China and the US are experiencing testing times.

Following the euphoria we have experienced over the past 12 months or so in the UK recovery, this is proving to be a difficult backdrop against which businesses can plan for growth. It is worth noting that Aldermore the challenger bank, providing finance for the SME market, has recently announced it has pulled its proposed IPO due to concerns over the valuation.

This environment has the potential to put a significant spanner in the works of our recent growth trajectory and could just be the catalyst that sets off further financial problems. Let’s hope not.

How to grow profits out of uncertainty

It seems to me that the surest thing that has come out of the last 6 years has been that nothing is certain, and that it is very difficult to forecast anything much past the end of the day.

Notwithstanding all this I believe there is still scope to improve the profitability of a business when times are tough. Remaining flexible and being able to adjust your business model to take account of the current and hopefully future environment is key to this. Outsourcing business critical functions can play a critical role in this strategy of flexibility and give you access to the best resources to assist in these actions without increasing the fixed costs of the business.

In this article I have sought to provide a quick checklist of some of the key drivers of profitability and have given links to trusted resources whom we have personal experience of, and are very happy to recommend.

Profit drivers

1.Strategy: Make sure your strategy has been developed to achieve the business purpose. Is it fully aligned with the current market and economic environment? Make sure that the various functions of your business are fully co-ordinated to achieve optimum outcomes.

2. Brand identity: Make sure your brand and associated messaging is telling the marketplace exactly what you are offering and why they should buy from you

3. Sales: Outsource your sales strategy. Increasing sales during a market slowdown is potentially easier than you would think as your competitors may well be shrinking their sales and marketing functions as a reactive measure. A proven sales professional can prove invaluable at this time

4. People: Make sure your people are with you, that they are motivated and all working for the same thing.

5. Finance costs: Making sure you have both enough finance and keeping the costs down is difficult at any time, but is especially so when the going gets tough. However this is possible in many cases.

6. Overheads: You might think this is an obvious one. However it is very important to recognise that course cutting costs by reducing say marketing spend is not conducive to longer term profitability. Reducing the cost of individual consumable items, such as stationery or electricity, does of course have an immediate impact on profits without damaging the sustainability of the individual business model.

Links to recommended providers of these outsourced Resources:

As always please feel free to contact us here at Trans Capital for assistance or to introduce you to one of these or other specialists who can help you grow the profitability of your business. There is no charge for an initial consultation.

Summary

There are a whole range of options here, and I can pretty much guarantee that if they were all taken up the long term sustainable profitability of any business would be improved, whatever was happening in your individual market place or in the wider economy.

It may of course be a case of ‘picking and mixing’ from these options to suit individual circumstances.

As always, if you have any comments on this article or would like to discuss any aspect of it please contact me atinfo@transcapital.co.uk or on 0845 689 8750.

John Thompson is Managing Director and founder of Trans Capital Associates